Relationship between Ownership Structures and Earnings Management Behavior in Vietnamese Commercial Banks

Tran, Thinh Quoc; Ly, Anh Hoang; Nguyen, Dung Khanh Ngoc

doi:10.13106/jafeb.2020.vol7.no9.401

Cited by 8 publications

(8 citation statements)

References 13 publications

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“…Rungporn et al, 2017;Rachman et al, 2018;Tran et al, 2020;Duong et al, 2020) conclude that retail banking model leads to stability, while wholesale banking and trading activity oriented banking is not sustainable. Most of the studies that…”

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confidence: 99%

Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

Al-Kharusi¹,

Murthy²

2020

JAFEB

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Stability and sustainability of the biggest banks in any country are extremely important. When big banks become unstable and vulnerable, they typically stop lending. The resulting credit squeeze pushes the economy into recession or a slow growth path. The present study examines the financial stability and sustainability of the 30 large banks operating in the six Gulf Cooperation Council countries. These banks represent 70% of the GCC banking market. Monte Carlo simulation was attempted assuming that key drivers can vary randomly by twenty percent on either side of the current values. The conclusions are drawn based on 300 simulation trails of the five-year forecast balance and income statement of each bank. Year 2020 is not favorable for the GCC countries because of the COVID-19 pandemic and low oil prices, though the future years may be better. The study identifies several banks, which may become financially unsustainable because the simulations indicate the possibility of negative profitability, unacceptably low capital ratios and potential for heavy credit losses during periods of economic turbulence, which is the current situation due to the COVID-19 pandemic. Through simulation the paper is able to throw light on which factors lead to bank instability and weakness.

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confidence: 99%

Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

Al-Kharusi¹,

Murthy²

2020

JAFEB

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“…However, [ 56 ] found that banks with high earnings management practices will encourage audit committees to increase their voluntary disclosure. [ 57 ] revealed that higher earnings management practices of banks were caused by lower foreign ownership and higher ownership concentrations of these banks. Finally, [ 58 ] showed that banks’ earnings and insolvency risk are extremely affected by sustainable banks practices while market power was not one of the profitability drivers in sustainable banks.…”

Section: Literature Reviewmentioning

confidence: 99%

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

AL-Najjar

Assous

2021

PLoS ONE

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CAMEL is considered one of the well-known banking rating systems used to build a proper bank ranking. In our paper, we investigate the CAMEL rating for Saudi banks, which is considered the second largest banking sector in GCC. The Saudi banking sector consists of 11 banks and is the leading sector in the Saudi stock index (TASI). In this research, we aim to determine the ranking of Saudi banks according to CAMEL composite and CAMEL overall ratings and explore the effects of these ratings on banks’ total deposits for the period from 2014 to 2018. The methodology involves four phases. In the first phase, we calculate the key financial ratios of CAMEL’s composites for each bank. In the second phase, we rank the banks from 1 to 11 to each one of CAMEL’s composites for each bank per year. In the third phase, we rank Saudi banks according to CAMEL composite and CAMEL overall. Finally, in the fourth phase, we run a regression model using CAMEL financial ratios rank as independent variable and banks’ total deposits as a dependent variable. Using the stepwise regression method, the results indicated that the best regression model has an adjusted R2 of 73.4% and a standard error of around 0.58. The results further indicated that capital measured by CAR, management as an efficiency ratio, earning with ROE proxy, and liquidity as loans to deposits have positive effects on banks’ total deposits. Meanwhile, earnings as net interest income to net revenue and liquidity calculated by CASA have a negative effect on banks’ total deposits. Finally, asset quality ratios and the rest of the ratios have no significant effect on banks’ total deposits.

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“…In the Moroccan banking sector, the ownership structure is diversified. However, prior studies acknowledged many factors influencing banks' EM practices, including the ownership structure (Tran, Ly, & Nguyen, 2020;Osemene et al, 2018;Sadjiarto, Monica, & Budiarti, 2019). The bank owners, ranging from individuals, promoters, institutional investors, foreign or local investors, private or public investors, share a proportion of the bank's capital.…”

Section: Audit Committeementioning

confidence: 99%

Discretionary loan loss provision in the Moroccan banking sector: The role of governance mechanisms

Mokrani

Idrissi

Alami

2021

amor

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Purpose: The present paper aims to examine the impact of corporate governance mechanisms on earnings management extent in the Moroccan banking sector. Research methodology: This research investigates the relationship between listed banks' governance mechanisms and earnings management in the CSE over the period 2017-2020. This study relies on a two-step quantitative approach, which consists firstly of estimating discretionary loan loss provisions to measure EM, then presenting the association between banks’ governance mechanisms and discretionary loan loss provisions. Results: The findings indicate that board size, gender diversity, audit committee’s independence, and state ownership constraint EM practices among the Moroccan listed banks. While other governance mechanisms, such as institutional ownership and board activity, seem to have no significant effect on restraining managers’ discretionary behavior. Limitations: Many qualitative and quantitative factors could influence discretionary loan loss provisions and not only the used variables in this research. Contribution: This research reveals the need to maintain the vigilant supervision of the regulatory framework to limit these opportunistic practices in the local banking industry. Also, our study has important implications for establishing a new set of governance requirements such as board diversity in Morocco.

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Relationship between Ownership Structures and Earnings Management Behavior in Vietnamese Commercial Banks

Cited by 8 publications

References 13 publications

Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

Discretionary loan loss provision in the Moroccan banking sector: The role of governance mechanisms

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